Payments terms are used in the sales and purchasing systems to determine when transactions are due for payment and whether discount should be applied.
Description - for example 30 Days from Date of Invoice
Basis - the basis of calculation of the due date either by reference to the Invoice date or Month end date
Days - the number of days from the base day
Months - the month end used in the base day
Discount - a percentage which is used in Sales Ledger to calculate the settlement discount applicable to the transaction
Each Customer or Supplier is allocated a payment term from this table. Examples | Description | Basis | Days | Months | Discount | | ———– | —– | —- | —— | ——– | | 45 Days from Invoice Date | Invoice | 45 | 0 | 0 | | End of Month following Invoice Date | Month | 0 | 1 | 0 | | End of Invoice Month plus 75 days with 2.5% Discount | Month | 75 | 0 | 2.50 | | End of Month 2 following Invoice Date | Month | 0 | 2 | 0 |